Critics warn it would harm state’s economy; one calls it ‘demagoguery’

Twenty-three years after Michigan’s Supreme Court allowed the conversion of a worn-down neighborhood in an auto plant in 1981, the court forbid further such uses of eminent domain. Opponents of Proposal 4 say that makes amending the state constitution unnecessary.

Three years after the Michigan Supreme Court reversed a decades-old ruling that allowed the City of Detroit to flatten a neighborhood to make way for an auto plant, the state’s voters will decide whether or not to fortify that recent reversal with a constitutional ban on such practices.

Proposal 4, which was placed on the Nov. 7 ballot by a near-unanimous vote of the state Legislature, would prohibit state and local governments from using a bedrock power—eminent domain—to do what the 1981 Detroit case, famously known as the Poletown decision, did: forcibly transfer property from one private owner to another. The measure would also make it more difficult and expensive to use eminent domain for redeveloping blighted neighborhoods as well as for traditional public projects such as building highways or schools.

Proposal 4s supporters say the measure will insure that, no matter the high court’s leanings, Michigan property owners are protected from misuse of eminent domain. But the measure’s critics say it is unnecessary, unwise, and would make it more difficult for Michigan cities to redevelop depressed downtowns, neighborhoods, and economies.

The debate comes as Democratic Governor Jennifer M. Granholm and Republican Dick DeVos step up their attacks on each other’s economic recovery programs for the state with the nation’s second-worst unemployment rate. Governor Granholm says her administration’s strategy for attracting knowledge-economy companies and jobs to replace the state’s collapsing industrial base is starting to work; Mr. DeVos insists that it is time to try his recipe instead: more tax cuts for—and less regulation of—businesses.

But Proposal 4’s opponents assert that, no matter who wins the gubernatorial contest, the amendment, if approved, would slow Michigan’s desperately needed economic recovery by slowing many redevelopment projects, making all of them more expensive, and those involving private companies willing to invest in depressed urban areas essentially impossible.

State Senator Liz Brater, a Democrat and former mayor of Ann Arbor, joined just two other senators in voting against the ballot amendment.

“I’m just concerned that it would further complicate the condemnation process,” Senator Brater told the Great Lakes Bulletin News Service. “I think it will create uncertainty for cities. We don’t need to put more obstacles in the path of struggling urban areas striving to reinvent themselves.”

From Poletown to New LondonDetroit was trying to revive—if not reinvent—itself in 1981 when it condemned hundreds of acres of property in a rundown but lively neighborhood wedged between Hamtramck and the I-94 expressway. The Motor City wanted to flatten the neighborhood, known as Poletown, to make way for a Cadillac assembly plant, but residents fought the city’s use of eminent domain all the way to the state Supreme Court.

In Poletown Neighborhood Council v. Detroit, the court weighed the potential expansion of the city’s tax base, as well as the number of jobs the new plant would generate in a city experiencing a severe recession, and declared them as acceptable reasons to flatten a neighborhood containing more than 4,200 citizens, 600 businesses, and 16 churches. The court noted that the Michigan Legislature had empowered cities to be active in economic development, but cautioned that the alleged benefits must be clear and significant, not marginal or speculative.

That decision stood for 23 years, until Wayne County, hoping to facilitate development near its Detroit Metropolitan Airport, tried to apply eminent domain in a similar way. It wanted to assemble 1,300 acres of land for private developers who would build a conference center, hotel, recreational facilities, and technology park. But some residents living within the proposed site sued.

Wayne County argued that the takings would generate benefits similar to Poletown’s: new jobs, tax revenue, and economic diversification. But in its 2004 decision, County of Wayne v. Hathcock, Michigan’s Supreme Court sided with the residents and said it would allow eminent domain only when public use was both necessary and a matter of public concern. The court added that, in cases where eminent domain involved private companies as eventual receptors of condemned property, those companies would have to accept monitoring by the Public Service Commission.

Then, in June 2005, another shoe dropped: The U.S. Supreme Court allowed New London, Conn., to use eminent domain to condemn 115 homes in a blighted area and hand the properties over to a firm that would build a waterfront hotel, restaurants, retail space, and new homes. The project would bring new life and a larger tax base to a town badly in need of both.

That decision, Kelo v. New London, set off alarm bells among property rights groups across the country. Since then, more than half of America’s states have addressed the issue, and eminent domain or regulatory takings initiatives will also be on November ballots in Arizona, California, Florida, Georgia, Idaho, Nevada, New Hampshire, North Dakota, Oregon, South Carolina, and Washington. Voters in Louisiana passed a similar constitutional amendment in September.

Business Says ‘Yes’Together, the Poletown and Kelo decisions inspired Michigan State Representative Tony Stamas (R-Midland) to propose putting the constitutional amendment on the 2006 statewide ballot. Following the Legislature’s December 2005 approval of the bill, Senator Stamas heralded the coming statewide vote.

“Although the Michigan Supreme Court has ruled on behalf of property owners before, we need to make sure it stays that way,” the senator said in a press release. “We need this constitutional amendment in place so that the rights of private property owners are clearly spelled out.”

The ballot effort has the support of influential statewide organizations such as the National Federation of Independent Businesses, Michigan Association of Home Builders, Michigan Chamber of Commerce, and the Michigan Association of Realtors; all are members of the Protect Our Property Rights Committee. Republican gubernatorial candidate Dick DeVos also supports the measure. Governor Granholm’s office did not respond to requests for a position statement on the issue.

In explaining his organization’s support for Proposal 4, Michigan Chamber President and CEO Jim Barrett said, “Private property rights are fundamental in a social system based on individual freedom and personal responsibility and are inextricably linked to economic prosperity.”

The Chamber’s chair, John D. Pirich, added: “Private property rights are part of the foundation of democracy and our system of free enterprise.”

And Brad Ward, director of Public Policy & Legal Affairs for the Michigan Association of Realtors, told the Great Lakes Bulletin News Service that Proposal 4 “limits or narrows the definition of public use and makes it harder for government to simply take a home for economic development or increased tax revenues.”

Senator Stamas, who also declined requests for an interview for this story, is working closely with the Protect Our Property Rights Committee, attending events sponsored by the group.

Former Mayors Say ‘No’Although there has been little organized opposition to Proposal 4, some veteran government officials say the amendment is a bad idea because the state court’s decision makes it unnecessary and it will, like that decision, further slow attempts around the state to jumpstart local economies.

One outspoken opponent of the measure is John L. Logie, the former Grand Rapids mayor often credited for the economic resurgence of the state’s second-largest city. The former mayor, who is a board member of the Michigan Land Use Institute and someone who accomplished a great deal of urban revitalization during his mayoral tenure, termed Proposal 4 “bad legislation.”

“The Separation of Powers Doctrine, which charges each of our three branches of government to respect the actions of the other two, is clearly being violated,” Mr. Logie, an attorney, said. “Our legislators are preying on the unfounded fears of our citizens. That is the classic definition of demagoguery. The right time to legislate, if at all, would be after a future Supreme Court had changed it; never before.”

The former mayor also criticized the amendment’s requirement that governments pay 125 percent of fair market value whenever they successfully condemn a property.

“There is simply no justification for a 25 percent ‘bump up,’ except ill-placed sympathy,” he asserted. “It is an unconscionable penalty to any governmental entity which needs the property for a new school, city hall, jail, etc. It flies in the face of more than 100 years of jurisprudential history commanding that ‘just compensation’ is ‘what a willing buyer would pay a willing seller, neither being compelled to act.”

“The burden on taxpayers will be enormous,” Mr. Logie said. “Proposal 4 should be defeated.”

Senator Brater said that the amendment’s requirement that, in blighted neighborhoods, governments proceed parcel by parcel, instead of block by block, would slow urban redevelopment efforts to a crawl, even when, as the amendment requires, no private redevelopment companies are involved.

“I’m concerned like a lot of others”, the senator said, “that for mixed use developments, it would make it very difficult to accomplish. Paying 125 percent of property value, assembly parcel by parcel—those are the major concerns.”

Some organizations that are neutral on the proposal are also expressing concern. Brad Garmon, Land Programs Director at the Michigan Environmental Council, questioned the measure’s necessity.

“We are trying to point out that this proposal is not necessary because of existing case law and might burden the legitimate use of eminent domain,” Mr. Garmon said. “There are legitimate uses of eminent domain, particularly in areas with so many issues of blight and negligent property owners. This proposal offers no new protections; but it does make it more difficult to use.”

Charlene Crowell is the Michigan Land Use Institute’s state policy director. Reach her at charlene@mlui.org.